Start Date
6-1-2011 2:30 PM
End Date
6-1-2011 3:45 PM
Track
1. Track 1 – Formal Paper Presentation
Subject Area
Finance and Economics
Faculty Member
Dae-Young Kim. kimdae@missouri.edu
Abstract
Customer satisfaction has been considered one of the most prominent factors in the measurement of marketing strategies and performances. On the other hand, profitability and value of firm are important indicators of companies’ financial performance. Considering the unique differences from other industries (e.g., intangibility, variability, etc.), this study assumes that the hospitality industry will be more vulnerable to customer satisfaction than any other industry in terms of the firm’s profitability and value. Based upon this presumption, this study empirically examines whether the customer satisfaction index (CSI) influences the companies’ financial performance in the hospitality and tourism industry (i.e., hotels, restaurants, and airlines). Findings suggest that the impact of customer satisfaction is only reflected in the return on equity (ROE) which is proxy of a firm’s profitability. This result indicates that marketing strategy for customer satisfaction affects a firm’s short-term profitability in the hospitality and tourism industry. Possible further implications are also discussed.
Keywords
customer satisfaction, profitability, firm’s value, ACSI, ROE
Customer Satisfaction, Profitability, and Firm Value in the Hospitality and Tourism
Customer satisfaction has been considered one of the most prominent factors in the measurement of marketing strategies and performances. On the other hand, profitability and value of firm are important indicators of companies’ financial performance. Considering the unique differences from other industries (e.g., intangibility, variability, etc.), this study assumes that the hospitality industry will be more vulnerable to customer satisfaction than any other industry in terms of the firm’s profitability and value. Based upon this presumption, this study empirically examines whether the customer satisfaction index (CSI) influences the companies’ financial performance in the hospitality and tourism industry (i.e., hotels, restaurants, and airlines). Findings suggest that the impact of customer satisfaction is only reflected in the return on equity (ROE) which is proxy of a firm’s profitability. This result indicates that marketing strategy for customer satisfaction affects a firm’s short-term profitability in the hospitality and tourism industry. Possible further implications are also discussed.